INTERNATIONAL BUSINESS Chapter 1

International Marketing

Sohaib Rabbani [email protected]

Chapter 1The Scope and Challenges of International Marketing

It was six men of India.To learning much inclined, Who went to see the Elephant (Though all of them were blind), That each by observation Might satisfy his mind

--John Godfrey Saxe

Distinction b/w Int. marketing and other Marketing

Domestic marketing is the marketing practices within a marketer's home country.

Foreign marketing is the local operations within a foreign country (i.e., marketing methods used outside the home market).

Comparative marketing analytically compares two or more countries' marketing systems to identify similarities and differences.

International marketing studies the "how" and "why" a product succeeds or fails abroad and how marketing efforts affect the outcome. It provides a micro view of the market at the company level.

Multinational, global, and world marketing are all the same thing.

Multinational marketing treats all countries as the world market without designating a particular country as domestic or foreign.

As such, a company engaging in multinational marketing is a corporate citizen of the world, whereas international marketing implies the presence of a home base. However, the subtle difference between international marketing and multinational marketing is probably insignificant in terms of strategic implications.

“If we only distributed pictures in the U.S., we’d lose money. It takes the whole world now to make the economics of movie-making work”

- William MechanicPresident, 20th Century Fox

“Half the people in the world have yet to take their first picture. The opportunity is huge, and it’s nothing fancy. We just have to sell yellow boxes of film.”

- George M.C. Fisher

CEO, Eastman Kodak Company

Q. Why products are more economical in India as compared to Pakistan?

Ans: Mass production for the vast population.

Q. Why Japan being a small country produces economical cars as compared to USA or Europe?

Ans: Concentrate more on foreign markets thus selling more cars through export

WORLD’S TOP 10 FORTUNE 500 COS. 20111.WAL-MART STORES (US Retailer)2.ROYAL DUTCH SHELL (Dutch / Holland)3.EXXON MOBIL (US Oil Company)4.BP (UK Oil Company)5.SINOPEC GROUP (Chinese Oil Company) 6.CHINA NATIONAL PETROLEUM (Chinese Oil Co.)7.STATE GRID (Chinese power company)8.TOYOTA MOTOR (Japanese Automaker)9.JAPAN POST HOLDINGS (Japan Postal services)10.CHEVRON (US Oil company)

WORLD’S TOP 10 FORTUNE 500 COS. 20011. Exxon Mobil (US)2. Wal-Mart Stores (US)3. General Motors (US)4. Ford Motor (US)5. General Electric (US)6. Citigroup (US)7. Enron (US Energy Co)8. Intl. Business Machines (US)9. AT&T (US)10. Verizon Communications (US)

ANALYSIS2011 US (3), CHINA (3), JAPAN (2) DUTCH (1), UK (1),

2001US (10)

Industry wise Foreign ownership of US Companies 2011Sound recording industries: 97%Contracts dealing &brokerage: 79%Motion picture and sound recording ind: 75%Metal ore mining: 65%Motion picture and video industries: 64%Wineries and distilleries: 64%Database, directory, and other publishers: 63%Book publishers: 63%Cement, lime & gypsum product: 62%Engine, turbine and power transmission: 57%Rubber products: 53%Nonmetallic mineral product manufacturing: 53%Plastics and rubber products manufacturing: 52%Plastics product: 51%Other insurance-related activities: 51%

WORLD’S TOP TEN EXPORTING COUNTRIES 2011

1. GERMANY 2. CHINA 3. US 4. JAPAN 5. FRANCE 6. ITALY 7. NETHERLANDS 8. RUSSIA 9. UK10.CANADA

I. The Internationalization of Business

II. International MarketingInternational Marketing - is concerned with planning and conducting transactions across international borders to satisfy the objectives of individuals and organizations.

The Challenge of International Marketing

Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

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Invented Here, Made Elsewhere

U.S. Invented Technology

Phonographs

Color TVs

Audiotape Recorders

Videotape Recorders

Machine Tools

Telephones

Semiconductors

Computers7 4%

9 8%6 4%

8 9%2 5%

9 9%3 5%

9 9%1%

1 0%0%

4 0%1 0%

9 0%1%

9 0%

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Irwin/McGraw-Hill

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Environmental Adaptation needed

Symbol of mourning

Timing in Asia and South America: The long waiting periord

Self Reference Criterion and Ethnocentrism: Major obstacles

Personal space

Refusal of invitation for food

Biscuits in UK is cookies in USA

Washing powder /shampoo packing

Undetected differences create marketing failure

CROSS CULTURAL ANALYSIS Define the business problem or goal in

home country cultural traits, habits or norms Define the business problem or goal in foreign country cultural traits, habits or norms through consultation with natives . Make no value judgment.

CROSS CULTURAL ANALYSIS Isolate the self reference criterion

(SRC) influence the problem and examine it carefully to see how it complicates the problem Redefine the problem without the SRC influence and solve for the optimum business goal situation

Developing a global awareness

1. Tolerance of cultural differences

2. Knowledge of culture, history, world market potential and global economic, social and political trend

Latin American reluctance about foreign investment Chinese reluctance to open completely to outsiders

Best approach: Culturally diverse senior executive / director

Developing a global awareness

Stages of International Marketing Involvement

No direct foreign marketing Infrequent foreign marketing Regular foreign marketing International marketing Global marketing

Strategic orientation

Domestic market extension orientation Multi-domestic market orientationGlobal marketing orientation

The orientation of international marketing

The successful international marketer possesses the best qualities of the anthropologist, sociologist, psychologist, diplomat, lawyer, prophet and businessperson